MerchantCircle Crosses to the Consumer Side

There are many people who may never forgive MerchantCircle for its early “robocalling” customer acquisition strategy. I’m told by the company that’s not happening any longer. But let’s put that issue aside for the time being because MerchantCircle is doing some really interesting things that are worth discussing.

As background for the rest of this post, I was recently told by Darren Waddell, MerchantCircle’s marketing VP, that the company now has 750K small businesses that have claimed a listing or are engaged with the site’s services to some degree (this is obviously not an advertiser number). He said that “member” number would be over one million before the end of the year.

While many of these merchants aren’t doing a great deal on the site (or may have shown up only once), there are many thousands of SMBs that are very actively using it to market themselves. And that’s turning into spontaneous Twitter recommendations in some cases:

Another impressive statistic: Waddell said “We’re driving 35 million page views, 17 million uniques per month of local traffic.” All of this is coming through SEO/search traffic.

As a result of this traffic the site is making a fair amount of money off ads that are getting very attractive CPMs vs. the rest of the market. All the SEO-based traffic the company is receiving has, according to Waddell, brought its customer acquisition cost down to nearly zero.

There is a range of advertising products that the company is selling to SMBs, from fixed fee to performance-based PPCall and PPC (WebVisible is a partner). According to Waddell, while there are several ad programs and products, there’s an overall emphasis on simplicity and low cost. Most services utilized by merchants are free.

Now, in order to enhance the value proposition for SMBs, MerchantCircle quietly expanded into consumer content. The new program is called “Neighbors” and it offers consumer-users a profile and personal “dashboard” where they can connect with one another, collect coupons, track merchants, generate favorite lists and reviews.

The following image is a screenshot of a community page from MerchantCircle’s Tulsa OK site:

Here’s an image of the consumer dashboard:

The dashboard enables the consumer-user to track (tabs across the top):

Coupons (I’ve collected from various merchants)

My reviews

Merchants I’m following (more on that in a moment)

Lists I’ve created and my “friends” (on MC). Here’s a snapshot of new lists created by consumers in San Francisco:

On to following; users can “follow” merchants in the same way that one has Twitter followers. Note the follow link under the phone number in the profile below:

After I click to follow, I’m connected to that business and it can directly communicate with me:

In much the same way that MerchantCircle has sought to create a social network of merchants, it has now begun that same work on the consumer side. But the object here is not so much to link consumers to one another as generate more interaction between consumers and merchants and stimulate demand, further activity and content creation. The content and pages populated by consumer-users in turn become more fodder for Google and SEO as well. The company appears to have hit some sort of inflection point with traffic from SEO.

Currently the way that MerchantCircle prompts consumers to join the Neighbors program is through the reviews process. When consumers land on a page via organic search results, some number of those users wind up writing a review of a local business on one of MerchantCircle’s merchant pages. Those review writers are then targeted by MerchantCircle for the Neighbors program:

MerchantCircle is also part of Facebook Connect. And if users log in with their Facebook username and password, their actions and activities on MerchantCircle are broadcast back to through their news feeds on Facebook.

If MerchantCircle is successful in getting consumers to join, create reviews, clip coupons and follow businesses, it will build considerable additional value for its merchants at no cost to itself. Waddell says that the SMBs active with MerchantCircle (mostly in smaller markets) and consumers may not line up 1:1 at the start. But given that MerchantCircle is making money and has been so successful getting SMBs to join, at the rate of 20K per month, it can afford to take the long view.

13 Responses to “MerchantCircle Crosses to the Consumer Side”

Unlike many I don’t think that cold-calling is, in and of itself, the kiss of death.

And, I’ve said it before. MC is a great platform for Parasite SEO.

All that said, I think some of what you’re showing gives a glimpse of the “Social Local” to come. The conversational communication of social media in a safe context of an almost-yellow pages makes a lot of sense to those trained in Facebook and Twitter.

Naked Pizza, Kogi Korean BBQ and others show what can happen when a small, quick-sale business embraces the medium.

I mean, think about it, this is what all the community review and collaboration sites were hoping to be.

Local-social: it’s coming. Google killer? No such thing. But I definitely think it’s a big step toward cutting through the growing din of online noise.

The problem wasn’t cold-calling, Will. The problem was that they were cold-calling with threatening messages that the receiver’s business had just received a negative review and that the receipient needed to sign-in (i.e., create an account) to do something about the review. Only it was a bold-faced lie, and there was no negative review anywhere on MC’s site.

Then they announced that the scare-tactic calls had stopped, but then they started up again, this time saying that a Merchant Circle user found the business on Google and wanted to verify that they were a real business. (Huh?) Oh, and of course the recipient business owner was supposed to login (i.e., create an account) to verify that they’re a real business.

I assume, Will, you don’t think these kinds of tactics are acceptable.

Given the way they’ve gone about acquiring “customers,” I don’t understand why anyone bothers to report their member stats at this point. Which is a shame because, as this post confirms and as I and many others have said repeatedly, the product/service they offer has value to SMBs.

I think it’s a smart strategy but may be a bit much to bite off. The old wisdom to pick one thing and become the best at it is being completely ignored by MC and they are becoming too cluttered and busy.

I logged into their business center and there was way too much going on compared to 1-2 years ago when it was clean, simple and effective. I could be wrong here but it seems that new SMB signups is slowing down compared to the rapid growth from 0 – 500k, especially considering traffic is booming.

One theory is their whole sign-up process and business center has too many options that overwhelm business owners. In the beginning the message was clear; join and grow your network. Now the message is not clear and there are to many options.

On top of this they are going after consumers. This will force them to pay even less attention to their target (the SMB). Pick one or the other, but trying to do a great job for both this early in the game could lead to mediocrity. “all things to all people” rarely works.

Now this advice is easy to give, hard to follow, especially for the creative entrepreneurial types. I struggle with it myself constantly.

I do agree that lying to people to entice them to sign up is bad. No doubt.

And yes Ahmed 750,000 users / active users / registered may be a total exaggeration.

But, one can’t argue with the impact of critical mass.

Matt, 2 years down the line only those in the industry will remember Merchant Circle’s deceptive sales tactics. And whether it’s 750K or 250K or 100K it’s still more than any of the other SMB aggregators outside of traditional Yellow Pages and, unlike Yellow Pages, MC has permission to get in their inbox.

Add to that the concept of consumers using the service to rate / review / organize and share and it becomes a pretty killer concept.

MC isn’t as pretty as the Local Matters GuideSpot product, but as often happens a great product with no go-to-market strategy fails.

So I’m certainly not defending the deceptive approach to obtaining critical mass, but from a chicken/egg perspective it’s now there to be leveraged which represents a leg up on the competition.

Typically social networks see only a percentage of their members fall into the “super-active” category. In our case, in any given month, we observe between 20-25% of our 750K local business members actively managing their listing. Interestingly, the merchants who are active are active over very long periods of time. So, for example, and active merchant who joined one year ago is highly likely to continue to be active on the network today.

While there is certainly a lot of tweaking/improving left to be done, we are really excited about this new product direction where we can better connect local business owners with local consumers. In the research we’ve conducted into our member base, the prospect of developing real relationships with customers is a big hit with local merchants.

I dont know why you are mentioning ‘super-active’ – you give it away yourself. Facebook counts over 200 million active users – ala users who have logged in in the past 31 days. By that measure, using your 25% #, really MC should be talking about 185,000 active members. If they are registered and not using your site, they may as well not be registered.